Be careful about your RRIF beneficiary

This has important implications for your heirs and your estate so here it is again:

Some people who do not have a surviving spouse are naming an adult, non-dependent child or grandchild as the beneficiary of their RRIF assets. This means the money in the plan passes to the beneficiary outside the estate on death. Recent court rulings have confirmed that the beneficiary is not personally liable to pay taxes on this money — but the estate is, because the RRIF assets are deemed to have been taken into income in the year you die.

The result could be to significantly reduce the inheritance of other heirs, because of the big tax hit. The consequences could be serious – perhaps a beloved family cottage would have to be sold to pay the RRIF taxes. The most extreme possibility is that the estate could end up bankrupt. If you’re in this situation and there is a significant amount of money involved, we recommend that you talk to an estate planning expert.